{"id":9984,"date":"2010-06-04T18:59:34","date_gmt":"2010-06-04T22:59:34","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=9984"},"modified":"2010-06-04T18:59:34","modified_gmt":"2010-06-04T22:59:34","slug":"forex-daily-market-commentary-75","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/06\/04\/forex-daily-market-commentary-75\/","title":{"rendered":"Forex Daily Market Commentary"},"content":{"rendered":"

By GCI Forex Research<\/strong><\/p>\n

Fundamental Outlook at 1400 GMT (EDT + 0400)<\/strong><\/p>\n

\u20ac<\/strong><\/p>\n

The euro depreciated sharply vis-\u00e0-vis the U.S. dollar today as the single currency tested bids around the US$ 1.1960 level and was capped around the $1.2215 level.\u00a0 The common currency dove below the psychologically-important US$ 1.2000 figure during the North American trading session and has not traded at these levels since March 2006.\u00a0 Technicans are now eyeing the 1.1640\/ 1.1210 levels as key downside areas of possible support.\u00a0 One major catalyst for the weaker euro today was a worsening of the financial situation in Hungary where the government admitted it is in a \u201cgrave situation.\u201d\u00a0 The situation in Hungary poses an interesting problem for European policymakers because Hungary is a member of the European Union but is not a member of the eurozone.\u00a0 The European Union cobbled together a bailout package for Greece along with the International Monetary Fund and the European Central Bank reduced their credit rating requirements for eligible collateral for repo purposes to make sure banks could post Greek bonds as collateral to receive cash.\u00a0 Many European banks \u2013 inside and outside of the eurozone \u2013 are likely sitting with Hungarian sovereign, corporate, and other debt on their books and a worsening of the crisis in Hungary could test Europe\u2019s resolve once again.\u00a0 French Prime Minister Fillon today said good things would result if the common currency traded as low as parity.\u00a0 French government debt may be downgraded on account of its massive fiscal debt position and high debt-to-GDP level.\u00a0 There is ongoing talk that Germany wants to leave the common currency altogether, a strong rumour that would rock the financial markets if it ever materialized.\u00a0 Group of Twenty officials will convene in Busan, South Korea this weekend and their top priority will be deficit reduction.\u00a0 Finance officials may also agree on some semblance of a global bank tax.\u00a0 Data released in the eurozone today saw Q1 GDP up 0.2% q\/q and 0.6% y\/y.\u00a0 In U.S. news, data released today saw May non-farm payrolls up 431,000, about 100,000 below consensus and up from 290,000 last month.\u00a0 The number was quite bad because around 411,000 of the jobs that were counted included temporary census workers.\u00a0 Absent those, today\u2019s number would have been quite weak.\u00a0 The unemployment rate moved lower to 9.7% from 9.9%.\u00a0 Average hourly earnings growth accelerated 0.3% m\/m and 1.9% y\/y and average weekly hours worked ticked higher to 34.2 from 34.1.\u00a0 Atlanta Fed President Lockhart reported job creation remains too weak.\u00a0 Euro offers are cited around the US$ 1.2620 level.<\/p>\n

\u00a5\/ CNY<\/strong><\/p>\n

The yen appreciated vis-\u00e0-vis the U.S. dollar today as the greenback tested bids around the \u00a591.50 level and was capped around the \u00a592.85 level.\u00a0 Traders reduced exposure to higher-yielding currencies and moved back into yen in a risk aversion trade.\u00a0 Hungary\u2019s problems are the latest excuse to sell higher-yielders and get long lower-yielders like the yen.\u00a0 Nikkei reported Bank of Japan may spend as much as \u00a52 trillion for a new lending program to stimulate economic growth.\u00a0 Finance minister Kan was named the new Prime Minister of Japan overnight following this week\u2019s resignation of Hatoyama.\u00a0 Vice finance minister Minezaki will represent Japan in Busan, South Korea this weekend at the Group of Twenty meeting and may become the new finance minister.\u00a0 Kan may apply more pressure on the central bank to ease monetary policy further.\u00a0 The yield on the five-year Japanese government bond reached a multi-year low overnight below 0.395%.\u00a0 This reflects increasing deflationary pressures and a perception the central bank may be forced to buy more Japanese government bonds.\u00a0 BoJ currently purchases about \u00a51.8 trillion in debt every month.\u00a0 The Nikkei 225 stock lost 0.13% to close at \u00a59,901.19.\u00a0 The euro moved lower vis-\u00e0-vis the yen as the single currency tested bids around the \u00a5109.75 level and was capped around the \u00a5113.35 level.\u00a0 The British pound moved lower vis-\u00e0-vis the yen as sterling tested bids around the \u00a5132.45 level while the Swiss franc moved lower vis-\u00e0-vis the yen and tested bids around the \u00a578.75 level. In Chinese news, the U.S. dollar appreciated vis-\u00e0-vis the Chinese yuan as the greenback closed at CNY 6.8288 in the over-the-counter market, up from CNY 6.8283.\u00a0 People\u2019s Bank of China Governor Zhou said \u201cthere are many factors\u201d that may have contributed to the decline in May manufacturing and said the European crisis may not be attributable.\u00a0 China\u2019s economy is expected to expand about 9% to 10% this year following a strong performance in the first quarter.<\/p>\n

\u00a3<\/strong><\/p>\n

The British pound depreciated sharply vis-\u00e0-vis the U.S. dollar today as cable tested bids around the US$ 1.4455 level and was capped around the $1.4680 level.\u00a0 Data released in the U.K. today saw May Halifax house prices off 0.4% m\/m.\u00a0 The BRC retail sales monitor will be released on Monday.\u00a0 Bank of England Monetary Policy Committee member Posen this week warned the eurozone financial crisis could spread to the U.K. and U.S.\u00a0 BoE Deputy Governor Bean warned against using inflation to reduce debt, adding \u201ca bit of inflation\u201d can turn into \u201ca lot of inflation.\u201d\u00a0 Bank of England Governor King this week said the system must seize the opportunity for reform and banks should not be permitted to be \u201ctoo big to fail.\u201d\u00a0 King reiterated support for the BoE\u2019s policy framework, reporting \u201cDespite its volatility, inflation remains low by historic standards, and on track to meet the target in the medium term. The framework has proved resilient to the stress of the financial crisis.\u00a0 It guided our monetary decisions going out into the crisis, and it will guide them coming out of it.\u201d\u00a0 Cable bids are cited around the US$ 1.4220 level.\u00a0 The euro depreciated vis-\u00e0-vis the British pound as the single currency tested bids around the \u00a30.8250 level and was capped around the \u00a30.8335 level.<\/p>\n

CHF<\/strong><\/p>\n

The Swiss franc depreciated vis-\u00e0-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1625 level and was supported around the CHF 1.1420 level.\u00a0 Swiss National Bank President Hildebrand today said \u201cThere\u2019s a consensus that the financial system needs to become more resilient.\u00a0 It\u2019s absolutely decisive that the regulatory focus remains on capital, liquidity, and a diffusion of the too-big-to-fail problem.\u201d\u00a0 There is increasing speculation again that Swiss National Bank may reduce its franc-selling intervention on account of the massive amount of market operations it has undertaken already this year.\u00a0 SNB member Leuthard verbally intervened against the strong franc this week..\u00a0 U.S. dollar bids are cited around the US$ 1.1420 level.\u00a0 The euro lost ground vis-\u00e0-vis the Swiss franc as the single currency tested bids around the CHF 1.3865 level while the British pound lost ground vis-\u00e0-vis the Swiss franc and tested bids around the CHF 1.6725 level.<\/p>\n

Forex Daily Market Commentary<\/strong><\/em> provided by<\/em><\/strong> GCI Financial Ltd<\/strong><\/a>.<\/strong><\/p>\n

GCI Financial Ltd (\u201dGCI\u201d) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (\u201dForex\u201d) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (\u201dCFDs\u201d) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.<\/p>\n

DISCLAIMER: GCI\u2019s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.<\/p>\n","protected":false},"excerpt":{"rendered":"

One major catalyst for the weaker euro today was a worsening of the financial situation in Hungary where the government admitted it is in a \u201cgrave situation.\u201d The situation in Hungary poses an interesting problem..<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-9984","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/9984","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=9984"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/9984\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=9984"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=9984"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=9984"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}